SLB Shares Climb on Major Malaysia Deepwater Contract Win
OneSubsea joint venture secures two 'sizable' EPC contracts from PTTEP, strengthening SLB's foothold in the growing Southeast Asian offshore market.
Shares of energy services giant SLB (NYSE: SLB) gained ground Thursday after the company announced its OneSubsea joint venture secured two significant deepwater contracts in Malaysia, signaling continued momentum in the offshore energy sector.
The stock closed up 2.7% to $37.32 in Thursday trading following the news, although it has since settled at $36.32. The contracts, awarded by Thailand's national petroleum exploration and production company, PTTEP, are for comprehensive subsea production systems for several deepwater fields off the coast of Sabah, Malaysia.
The engineering, procurement, and construction (EPC) awards cover the Alum, Bemban, and Permai fields in Block H, as well as the Kikeh field. While SLB did not disclose the specific financial terms, it categorized the contracts as "sizable," a designation the company typically uses for deals valued between $100 million and $250 million. This award extends a two-decade-long partnership between SLB's subsea division and PTTEP.
"We have been a trusted partner of PTTEP in Malaysia for 20 years, and this award is a testament to the strength of our long-standing relationship,” said Mads Hjelmeland, CEO of OneSubsea, in a statement released via Business Wire. "Our globally renowned subsea technology and expertise will help PTTEP unlock the full potential of their deepwater assets, and we look forward to continuing our collaboration to drive efficiency and innovation in the Malaysian offshore sector."
The deal reinforces SLB's strategic position in the Asia-Pacific region, a critical growth area for offshore oil and gas production. Malaysia, in particular, is poised to become a leading global contributor to new offshore natural gas output, with developments like the Block H expansion forming a core part of its energy strategy, according to industry analysis.
The OneSubsea joint venture, in which SLB holds a 70% stake, will deliver integrated solutions including subsea trees, wellheads, and control systems. This integrated approach is designed to streamline project execution and enhance production efficiency for PTTEP's deepwater operations.
The contract win provides a positive catalyst for SLB, which has a market capitalization of approximately $55 billion. Wall Street remains broadly optimistic about the company's prospects. Of 29 analysts covering the stock, 26 rate it as a "Buy" or "Strong Buy," with a consensus price target of $45.20, suggesting significant upside from its current trading level. Following a review of the company's updated disclosures, analysts at UBS recently reiterated a "Buy" rating on SLB with a $44 price target.
This latest award helps solidify SLB’s future revenue pipeline in its offshore and subsea segments, which are benefiting from a global resurgence in offshore investment. As energy demand continues to grow, complex deepwater projects are becoming increasingly vital, playing to the strengths of established service providers like SLB that can offer the sophisticated technology and project management expertise required.
Investors will be watching to see how this and other recent contract wins translate to SLB's bottom line in the coming quarters, as the energy services sector navigates a dynamic global market.